The Hidden Cost's in Buying!

There are usually many costs, on top of the buying price, that you must consider when buying a home. These extra fees, such as taxes and other additional costs come into play whether you’re looking to buy your first home, or trading up to a larger or smaller one. You will be surprised of an unwanted financial nightmare on the closing day if you’re not informed and prepared in advance. However, some of these costs are only one-time fixed payments, while others unfortunately represent an ongoing monthly or yearly commitment. It’s better to know about these costs are ahead of time so you can budget properly, even if they don’t apply in your situation.

Whether it’s your first, second or tenth home, buying a home is a major milestone and there are many important details to address, during the process. The last thing you need are unbudgeted financial obligations cropping up hours before you take possession of your new home.

1. Appraisal Fee
Your lending institution may request an appraisal of the property, which you may be responsible to pay for. Ask your lending institution if it’s included in there fee. Appraisals can vary in price from approximately $200 – $350.

2. Survey Fee
If the home you purchased is a resale, your lending institution may ask for an updated property survey. Ask your lending institution if it’s required. The price for this survey can vary between $800 – up depending on the size of the property.

3. Property Taxes
Your lending institution may decide to include your property taxes in your monthly mortgage payments, depending on your down payment. If your property taxes are not added to your monthly payments, ensure to have annual proof that your taxes have been paid.

4. Property Insurance
Home insurance covers the replacement value of your home. Proof that you are insured will be requested by your lending institution will request as it protects their investment on the loan.

5. Legal Fees
A lawyer must be involved to review all paperwork, even of the simplest of home purchases. Shop around, as rates vary greatly depending on the complexity of the issues and the experience of the lawyer.

6. Mortgage Loan Insurance Fee
Depending upon the equity in your home, some mortgages may require mortgage loan insurance. This type of insurance will cost you between 0.5% – 3.5% of the total amount of the mortgage. In addition to your mortgage and tax payment, these payments are also made monthly.

7. Mortgage Brokers Fee
In order to source a lender and organize the financing, you will need a mortgage broker who is entitled to charge you a fee for his/her services. However, it better for you to look around because many mortgage brokers will provide their services free to you by having the lending institution absorb the cost.

8. Moving Costs
The cost for a professional mover can cost you in the range of: $50 – $100/hour for a van and 3 movers, and 10 – 20% higher during peak demand seasons, like Christmas or March break.

9. Service Charges
Any new utility that services your hook up, such as telephone or cable, may require an installation fee.

10. Maintenance Fees
In your budget, ensure to have a section for maintenance fees, such as carpet cleaning or deck painting.

11. Water Quality and Quality Certification
If the home you purchased is serviced by a well, you must consider having your water checked regularly. Where you live determines whether or not a fee is charged to certify the quantity and quality of the water reaching your home.

12. Local Improvements
If the town or neighbourhood you live in has made local improvements, such as the addition of sewers or sidewalks, it could impact a property’s taxes by thousands of dollars.

13. Land Transfer Tax
Whenever a property changes hands, this tax will be applied. The amount that is applied can vary from one property to another.

You need to budget properly for your next move to avoid facing any financial troubles. Consult your broker or sales representative if any extra costs will be applied to you. Remember, purchasing a home is a major milestone and if you plan your budget accordingly, you will enjoy the best of your home.